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How Can Financial Institutions Prepare for Mounting Abandonment Rates?

On-boarding drop-out rates are rising significantly for financial service institutions. Banks are now losing 52% of their potential customers to application drop-out, an increase of 35% from two years ago. Consumers are increasingly frustrated with time-consuming, legacy processes and are willing to switch to challengers in their search for a streamlined, user-friendly experience. In fact, 43% of customers who had low satisfaction during new account opening indicated they will “definitely or probably” switch as a result.

Image Credit: Etienne Boulanger

What slows down on-boarding processes?

The primary culprits are old-fashioned, antiquated systems that require applicants to jump through unnecessary hurdles before receiving a decision. In a previous post, we fully explored what causes customers drop-out, ranging from requiring in-person visits to a branch, mailing documents, confusing language, filling in the same information multiple times, and length of time required to apply.

With the implementation of PSD2, consumers have become the ultimate arbiters of their information. Rather than fill out multiple, duplicative fields, they are empowered to share the data that is already available in their bank account like identifying information, rent, income, financial commitments and more.

What can your company do to combat increasing application abandonment rates? The short answer is to find a solution that makes on-boarding faster and easier for your consumers.

“Perfecting the on-boarding experience requires more than just rethinking your business processes. In order to succeed, your underlying technology must support continued innovation of front, middle and back office processes. Improving these processes makes it possible to provide the experiences customers want.” – Jim Marous, The Financial Brand

Financial service brands can start reducing their abandonment rates by focusing on improving user experiences. Bringing manual and analog processes online is one key way to increase the ease with which consumers on-board. Fully digitalised on-boarding enhances customer experience while reducing the lag time required by posting documents in the mail or making an in-person visit to a branch.

Electronic identification schemes solve another piece of the on-boarding puzzle. Over half of consumers would be more likely to apply for a product if the process was 100% online and without paper-based identity documents. As one of the major obstacles to accelerated on-boarding is identity verification, eID schemes are a valuable means to reducing barriers to entry. Another is requiring duplicate information, even if a current customer is buying another product from your institution.

Image Credit: Fikri Rasyid

Machine-learning, automation, and modern data analysis offer additional solutions to speed up the process without sacrificing KYC, AML and other risk management procedures. They are helping to power real-time decision-making, replacing multitudinous forms and documents with a few clicks.

In conclusion

Your brand needs a strategic partner with an API that improves the decision-making process, analysing the right data to help your financial institution reduce risks and increase customer acceptance.

With reams of customer data at our fingertips, how does one separate the wheat from the chaff while reducing the risks of error and fraud? Learn more about how Instantor can meet your needs.